Caution to dominate, for now

The Bank of Japan’s Policy Board meeting, which concludes on Thursday, is likely to be a non-event. There is still a compelling case for further monetary stimulus and today’s parliamentary testimonies are a timely reminder of the tensions on this point between the government and the central bank. But if the Policy Board felt no need to do more last month, despite publishing updated forecasts showing that deflation is expected to persist for at least two more years, members will presumably be even happier to sit on their hands this week following the upbeat GDP release.